The end of bronze

When was the last time you bought anything for a penny?  It is possible that your local newsagent still sells some kinds of sweets loose for a penny each.  Do you ever buy anything for two pence?

It seems that bronze coins exist merely for the purpose of children buying loose sweets, and there really is a case to be made for getting rid of them.  Of course you cannot realistically get rid of the penny unless you also get rid of the two pence coin as well, leaving shopkeepers to price everything in multiples of five pence.

Then again, I suppose that you could get rid of the penny and the five pence coin as well, and then price everything in multiples of two pence, but it would make more sense to scrap both remaining bronze coins.

Of course some of us might want to keep bronze coins for sentimental reasons, but consider the evidence:

The farthing was legal tender in this country until 1960.

The sixpence was legal tender in this country until 1980.

The halfpenny was legal tender in this country until 1984.

The engine of change in our currency is inflation.   Back in 1983 there were probably a lot of things you could buy for less than five pence, but now there is almost nothing.  Inflation is a trend rise in prices, and likewise the fall in the value of money over time.  I will go into this in more depth in a future post, but for the time being I will note that the British government currently sees an inflation rate of two percent per year as being reasonable.

This may seem only a small increase, but look at the long term view.  If prices rise every year at two percent, then the loaf of bread you buy today for 80p will cost 98p in ten years time, £1.19 in twenty years time, and £2.15 in fifty years from now.  Likewise, the bag of chips which today costs £1.30 will cost £1.58 in ten years time, £1.93 in twenty years time, and £3.50 in fifty years from now.

By contrast, if we allow inflation at just three percent every year, then a loaf of bread will cost £3.51 in fifty years from now, and a bag of chips will cost £5.70.

But wait - the loaf of bread will not cost £3.51, because in fifty years from now the penny and the two pence coin will almost certainly be history, and the five pence coin might have gone as well.  Presumably therefore the loaf of bread will cost either £3.50 or £3.60.

Of course we could elect a government committed to zero inflation, but when will that happen?

Footnote: regarding the title of this post, I am aware that the so-called bronze coins are no longer minted in bronze.  Since 1992 they have been minted in copper-plated steel.